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Trade credit model with customer balking and asymmetric market information

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  • Zhang, Baofeng
  • Wu, Desheng Dash
  • Liang, Liang

Abstract

Customer balking exists in many industries, and would significantly impact the supply chain management. We consider trade credit, customer balking behavior and market information asymmetry and information sharing in a two-level supply chain. Stackelberg equilibriums are derived in each scenario, respectively. The wholesale price and order quantity at equilibrium decrease (increase) in balking threshold (balking probability) when the production cost is not relatively low. The retailer benefits from the manufacturer’s pessimism with information asymmetry, while the optimism with information sharing. However, information asymmetry always harms the manufacturer. We design an information-dependent-credit-limited contract to enforce the retailer to share information.

Suggested Citation

  • Zhang, Baofeng & Wu, Desheng Dash & Liang, Liang, 2018. "Trade credit model with customer balking and asymmetric market information," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 110(C), pages 31-46.
    • Handle: RePEc:eee:transe:v:110:y:2018:i:c:p:31-46
    DOI: 10.1016/j.tre.2017.10.006
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